• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

In line quarter but Q4 guidance below.  2011 guidance looked strong but similar to MAR, is there enough visibility for high single digit RevPAR guidance?

“We were able to beat expectations thanks to our top-line growth initiatives that powered third quarter REVPAR results. Our distinctive and compelling brands are gaining share, and our strong presence in the key global cities positions us well to benefit from the return of the business traveler.”

- Frits van Paasschen, CEO


  • WW System-wide REVPAR (SS): +10.0% (11.1% in constant dollars)
  • System-wide REVPAR (SS) in North America: +10.6% (10.0% in constant dollars)
  • Worldwide SS company-operated gross operating profit margins: +140bps
  • Worldwide REVPAR for branded SS Owned Hotels: +10.8% (12.5% in constant dollars)
  • REVPAR for Starwood branded SS Owned Hotels in NA: +12.5% (11.2% in constant dollars)
  • Margins at Starwood branded SS Owned Hotels Worldwide: +110bps
  • 3Q 2010 included a "pretax charge of $55 million ($52 million after tax or $0.28 per share) and were primarily related to the loss on the sale of one hotel. Special items in the third quarter of 2009 included an $11 million after tax benefit or $0.06 per share primarily related to a tax benefit on a hotel sale."
  • "In North America, supply growth in the Upper Upscale and Luxury segments is expected to fall below 0.5% in 2011, and remain at these low levels for a few years to come."
  • "During the third quarter of 2010, the Company signed 20 hotel management and franchise contracts, representing approximately 4,500 rooms, of which 15 are new builds and five are conversions from other brands. At September 30, 2010, the Company had approximately 350 hotels in the active pipeline representing approximately 85,000 rooms."
  • There was almost no room attrition in the quarter with 3,300 rooms entering the systems and only 300 rooms exiting.
  • "Originated contract sales of vacation ownership intervals decreased 4.8% primarily due to lower tour flow and a lower average price. The number of contracts signed decreased 3.6%...and the average price per vacation ownership unit sold decreased 2.5% to approximately $14,000, driven by price reductions and inventory mix."
  • "On September 29, 2010, the Company completed the sale of one hotel for gross proceeds of $70 million. This hotel was sold subject to a long-term management contract." (Aspen St. Regis)
  • In 3Q2010, HOT "completed the securitization of approximately $300 million of vacation ownership notes receivable. Approximately $93 million of proceeds from this transaction were used to terminate the privately placed securitization completed in June 2009. The net cash proceeds from the securitization were approximately $180 million."
  • "The Company expects to receive a tax refund of over $200 million during the fourth quarter of 2010."
  • 4Q2010 Guidance:
    • Adjusted EBITDA of $230-235MM -which is unchanged from HOT's guidance and consensus of $245MM
    • SS company operated WW RevPAR: 7-9% in constant dollars
    • RevPAR for Branded SS owned hotels WW: 7-9% in constant dollars
    • EPS: $0.36-$0.38 vs. consensus of $0.38
  • 2011 Guidance:
    • Assume continuation of current trends
    • SS company operated WW RevPAR: 7-9% in constant dollars
    • RevPAR for Branded SS owned hotels WW: 7-9% in constant dollars
    • Adjusted EBITDA of $950-$990MM (consensus at $965MM)
    • EPS: $1.44-1.55 (vs. consensus at $1.50)


  • Asia Pacific accounts for 22% of their fee income and over 60% of their pipeline
  • The lodging recovery continues despite the economic malaise. Both business and leisure travel continue to show improvement.
  • Strength in gateway cities is spreading to secondary markets
  • Corporate rate negotiations - like what they are seeing so far
  • In Sept, booking for 2010 were up 19%, and revenues for 2011 were up 30%
  • 2011 group pace is now flat with last year.  Think that 2011 group bookings can match 2008 levels.
  • Close rates in VOI are steadily improving
  • Will generate $220MM of cash in timeshare this year
  • Headcount is flat over 2009 and expect it to remain flat in 2011
  • Plan to open 86 hotels in Asia Pacific in the years ahead - with the greatest number in China
  • RevPAR growth in China was up 33% 
  • EMEA division President:
    • Europe: Will have 22 openings in Central Europe over the next few years
    • Plan to open 20 hotels in the next 3 years in the Middle East. Saw rates turn positive in September
    • Africa has experienced substantial growth: 30% unit growth.  RevPAR increase 5% this past quarter (ADR increase offset by occupancy declines)
  • Latin America:
    • Mexico saw RevPAR growth of 4% in the 3rd quarter
    • There was a 2 point increase in margin
  • Goal is to hold cost growth at half the rate of inflation
  • Think that they can exceed past peak levels
  • India update: 29 hotels open and 18 under construction. They are the largest hotel chain in India.


  • They expect a double digit increase in RevPAR for 2011 in China
  • Incentive fees are currently driven by international fees and will grow more in-line with international RevPAR
  • Unit growth assumptions for 2011?
    • Looking to open 80 hotels in 2010 and a little less in 2011
  • Expense growth: European RevPAR growth was weak and there was more incentive comp...
    • Greff actually asked some good questions and they answered none of them.. hmmm
  • Last year they got business interruption insurance for H1N1 in 3Q09
  • Mgmt and franchise fees are low for next year
  • Rates in secondary citites in China are about 33% lower than in primary cities but yields are still attractive to owners. 
  • Use of cash: They will step up investment in their owned hotels... aside from that, they will update the Street on that during the Dec 8th analyst day. They will also continue to focus on debt reduction to become investment grade.
  • Why is their luxury RevPAR growth lagging?
    • Bulk of their collection is in Europe and they had a nasty FX impact
  • Would like to do a larger M&A sale but there are a lack of buyers right now